Largest costs overhaul predicted since the Woolf reforms as insurers complain of spiralling costs
The future of costs will be debated this week in the largest potential overhaul of the way lawyers are paid since the Woolf reforms. Insurers and representatives of every part of the legal profession and judiciary will debate on 2 October on the introduction of fixed costs for fast-track cases, which represent the bulk of cases handled by the courts. No substantial headway has been made on the issue until now. It was first debated in 1999 as part of the Woolf reforms but did not go any further due to disagreement by claimant lawyers. Some commentators of the current proposals argue that they are unworkable because of the disagreement between lawyers and insurers. Matthew Harman, chairman of the Association of Law Costs Draughtsmen, one of the bodies which is looking into this issue, told The Lawyer: "My view is that it will never happen because there are too many vested interests. For instance, the insurers will be at loggerheads with the litigators over how much can be paid out." Professor John Peysner of the Nottingham Law School, chair of the costs committee of the Civil Justice Council, said it would be difficult to make progress because of antipathy from claimant lawyers. He added that resentment towards fixed costs has been heightened since a costs judge recently ruled that uplifts on conditional fee agreements should be fixed at 5 per cent, a reduction of 15 per cent. "Claimant lawyers either like or don't like fixed costs, or feel they give too much power to the defendant," he said. The Government has come under fire for failing to introduce predictability into costs. The introduction of fixed costs marks a serious attempt by the legal profession to overcome the vast disparity in lawyers' fees in fast-track cases. Insurers are now claiming that costs are increasing annually by double-digit percentage points. Research is being carried out in the UK as part of the inquiry into fixed costs, where investigators are inspecting claimant lawyers' and insurers' records of costs over recent years. The Government has also been criticised for promoting the need to monitor costs while having done nothing to help facilitate this. The Lord Chancellor, Lord Irvine, who is involved in the current debate, has also shown some apathy towards sorting out the costs problem. His proposal in a 1998 paper, Justice at the Right Price, to examine the reasons for disproportionate costs was never undertaken.